Making Tax Digital Explained: Everything You Need to Know About HMRC's New Rules
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Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in decades. If you're self-employed or receive income from property, the way you report your income to HMRC is changing.

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Many people are understandably confused by the new rules, but the good news is that complying with Making Tax Digital doesn't have to be complicated. In this guide, we'll explain what Making Tax Digital is, who it affects, when it starts, and how Go Tax Refunds can help you stay compliant.

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What Is Making Tax Digital?
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Making Tax Digital is HMRC's initiative to modernise the UK's tax system by replacing paper records and annual tax reporting with digital record keeping and more regular submissions.

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Instead of submitting one Self Assessment tax return each year, many taxpayers will now need to:

• Keep digital records of their income and expenses.
• Use HMRC-compatible software.
• Submit quarterly updates to HMRC.
• Complete an End of Period Statement.
• Submit a Final Declaration to confirm their tax position for the year.

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The aim is to make tax reporting more accurate, reduce errors and give taxpayers a clearer picture of their tax position throughout the year.

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Who Needs to Register?

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Making Tax Digital for Income Tax applies to:

• Self-employed individuals.
• Sole traders.
• Landlords with qualifying property income.
• Individuals with a combination of self-employed and property income.

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Whether you need to comply depends on your qualifying income and HMRC's implementation timetable.

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When Does Making Tax Digital Start?‍

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HMRC is introducing Making Tax Digital in stages.

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Currently:

• Individuals with qualifying income over £50,000 are required to join first.
• Those earning over £30,000 will follow in the next phase.
• HMRC has also announced plans to extend the scheme further in future years.

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If you're unsure whether the rules apply to you, it's worth checking now rather than waiting until the deadline approaches.

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What Will You Need To Do?
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If you're affected, you'll need to:

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Keep Digital Records
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You'll need to record your income and allowable expenses digitally rather than relying on handwritten records or spreadsheets that aren't compatible with HMRC's requirements.

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Submit Quarterly Updates
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Instead of waiting until the end of the tax year, you'll send summaries of your income and expenses to HMRC every three months.

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These updates are not tax bills—they simply keep HMRC informed throughout the year.

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Submit Your Year-End Information

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At the end of the tax year you'll still need to finalise your figures by completing an End of Period Statement and a Final Declaration.

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This ensures all income has been declared correctly and any adjustments are made before your tax liability is calculated.

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What Software Can You Use?
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Making Tax Digital requires HMRC-compatible software.

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The right software should allow you to:

• Record income and expenses.
• Store digital records securely.
• Submit quarterly updates directly to HMRC.
• Complete your year-end declarations.
• Keep your tax information organised in one place.

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Choosing the right software can make staying compliant much easier.

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What Happens If You Don't Comply?

Failing to comply with Making Tax Digital could lead to penalties from HMRC.

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Potential issues include:

• Missing quarterly submission deadlines.
• Failing to keep digital records.
• Submitting incorrect information.
• Missing your Final Declaration deadline.

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Staying organised and using suitable software will help reduce the risk of penalties.

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What Are the Benefits?‍
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Although it means more regular reporting, Making Tax Digital also offers several advantages.

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Many people find they have:

• Better visibility of their business finances.
• More accurate financial records.
• Fewer mistakes.
• Easier bookkeeping.
• Greater confidence that they're meeting HMRC requirements.

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With the right support, the transition can be straightforward.

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How Go Tax Refunds Can Help
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We understand that Making Tax Digital can feel like a major change, especially if you've always completed a traditional Self Assessment tax return.

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That's why we've created two simple service options designed to suit different needs.

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MTD Core
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Ideal if you're happy to spread the cost throughout the year while paying separately for your annual Self Assessment.

• £10 per month.
• Quarterly Making Tax Digital submissions.
• Annual Self Assessment completed separately.

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MTD Total Package

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Our most popular option.

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Everything is included in one fixed monthly price.

• £30 per month.
• Quarterly Making Tax Digital submissions.
• Annual Self Assessment included.
• Ongoing support from our experienced team.

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With either package, we'll help ensure your submissions are completed accurately and on time, giving you peace of mind that you're meeting HMRC's requirements.

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Frequently Asked Questions

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Do I still need to complete a Self Assessment?

You'll still need to complete the year-end process, but it will now form part of the Making Tax Digital system through the Final Declaration.

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Can I still use spreadsheets?

Only if they're linked to HMRC-compatible software that meets Making Tax Digital requirements. Many people choose dedicated software instead.

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What happens if I miss a quarterly submission?

HMRC may issue penalties for repeated failures to comply, so it's important to submit your updates on time.

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I'm not sure if the rules apply to me.

If you're unsure whether Making Tax Digital affects you, contact Go Tax Refunds and we'll help you understand your obligations.

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Get Ready for Making Tax Digital Today

Making Tax Digital is changing the way millions of people manage their taxes, but you don't have to navigate it alone.

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Whether you're a sole trader, self-employed professional or landlord, Go Tax Refunds can help you stay compliant, avoid unnecessary penalties and take the stress out of your tax reporting.

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Contact our team today to discuss which Making Tax Digital package is right for you and prepare for HMRC's new digital reporting requirements with confidence.

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